PRIN.OF CORPORATE FINANCE >BI<
12th Edition
ISBN: 9781260431230
Author: BREALEY
Publisher: MCG CUSTOM
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Textbook Question
Chapter 12, Problem 11PS
Management compensation We noted that management compensation must, in practice, rely on results rather than on effort. Why? What problems are introduced by not rewarding effort?
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Chapter 12 Solutions
PRIN.OF CORPORATE FINANCE >BI<
Ch. 12 - Prob. 1PSCh. 12 - Terminology Define the following: a. Agency costs...Ch. 12 - Prob. 3PSCh. 12 - EVA Here are several questions about economic...Ch. 12 - Accounting measures of performance The Modern...Ch. 12 - Economic income Fill in the blanks: A projects...Ch. 12 - Prob. 7PSCh. 12 - Prob. 8PSCh. 12 - Prob. 9PSCh. 12 - Prob. 10PS
Ch. 12 - Management compensation We noted that management...Ch. 12 - Prob. 12PSCh. 12 - Prob. 13PSCh. 12 - Prob. 14PSCh. 12 - EVA Herbal Resources is a small but profitable...Ch. 12 - Prob. 16PSCh. 12 - Economic income Consider the following project:...Ch. 12 - EVA Use the Beyond the Page feature to access the...Ch. 12 - Accounting measures of performance Use the Beyond...Ch. 12 - EVA Ohio Building Products (OBP) is considering...
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- Discuss the concept of controllable and uncontrollable costs and how they affect the evaluation of the responsibility centers financial performance.arrow_forwardIf there are deviations from the stated goals and objectives, what steps can managers take to get back on track? Provide at least two specific examples.arrow_forwardWhere management's bonuses are tied to profit-based performance measures, management may have an incentive not to revalue assets because?arrow_forward
- A good performance measurement system should have the following characteristics: It should be based on activities over which managers have control or influence. It should be measurable. It should be timely. It should be consistent in its application. When appropriate, the actual results should be compared with the budgeted results, standards, or past performance. The measurements must not favor the manager over the goals of the entire organization. Often, managers have the ability to make decisions that favor their individual units but that may be detrimental to the overall performance of the organization. True / Falsearrow_forward1- What are the four cost categories of a costs of quality program? 2- What are relevant revenues and cost delays? 3- How do managers use financial and nonfinancial measures to evaluate quality? 4- Describe the three main measures used in the theory of constraints 5- What are the steps managers can take to manage bottlenecks?arrow_forwardWhich of the following is not an advantage of budgeting? a) Forces managers to planb) Provides information for decision makingc) Guarantees an improvement in organizational efficiencyd) Provides a standard for performance evaluatione) Improves communication and co-ordinationarrow_forward
- Which of the following is not a goal of performance evaluation systems? Promoting goal congruence and coordination Communicating expectations Providing feedback Reprimanding unit managersarrow_forwardWhat questions should managers answer when considering outsourcing?arrow_forwardWhich of the following statements is true? A balanced scorecard contains both customer and internal business process performance measures because improvements in internal business process should result in improvements in customer satisfaction. Incentive compensation for employees, such as bonuses, should be tied to balanced scorecard performance measures only if managers are confident that the performance measures are easily manipulated by those being evaluated.arrow_forward
- What are the advantages and disadvantages of using the balanced scorecard approach to performance evaluation of managers? Can it be manipulated?arrow_forwardWhich of the following is true about designing an accounting−based performance measure? A. Management's beliefs are not required during the analyses. B. The issues considered in each step are independent. C. The decisions made in steps are followed in a hierarchical order. D. Behavioral criteria are important when evaluating the stepsarrow_forwardWhich of the following is not a characteristic of a good performance measurement system? Group of answer choices A. timely B. consistent C. based on activities over which managers have no control or influence D. uses both long- and short-term performances and standardsarrow_forward
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